Hannah Arendt Center for Politics and Humanities
21Apr/142

Amor Mundi 4/20/14

Arendtamormundi

Hannah Arendt considered calling her magnum opus Amor Mundi: Love of the World. Instead, she settled upon The Human Condition. What is most difficult, Arendt writes, is to love the world as it is, with all the evil and suffering in it. And yet she came to do just that. Loving the world means neither uncritical acceptance nor contemptuous rejection. Above all it means the unwavering facing up to and comprehension of that which is.

Every Sunday, The Hannah Arendt Center Amor Mundi Weekly Newsletter will offer our favorite essays and blog posts from around the web. These essays will help you comprehend the world. And learn to love it.

Is Capitalism a Social Good?

421A book captures the Zeitgeist rarely in the 21st century, especially a book written by an empirical economist, published by a University Press, and translated from French. And yet Thomas Piketty’s Capital in the Twenty-First Century, published by Harvard University Press, is suddenly everywhere. Andrew Hussey at The Guardian interviews Piketty, who argues that capitalism does not improve the quality of life for everyone. Piketty seeks to prove that capitalism is rigged in favor of the wealthy. In other words, the wealth of the wealthy increases faster than the income of the workers. His main contention is that over the centuries since the emergence of capitalism, return on capital tends to be greater than the growth of the economy. Which leads to Piketty’s final conclusion that increasing inequality is inevitable within capitalism – and will only get worse: “When I began, simply collecting data, I was genuinely surprised by what I found, which was that inequality is growing so fast and that capitalism cannot apparently solve it. Many economists begin the other way around, by asking questions about poverty, but I wanted to understand how wealth, or super-wealth, is working to increase the inequality gap. And what I found, as I said before, is that the speed at which the inequality gap is growing is getting faster and faster. You have to ask what does this mean for ordinary people, who are not billionaires and who will never will be billionaires. Well, I think it means a deterioration in the first instance of the economic well-being of the collective, in other words the degradation of the public sector. You only have to look at what Obama's administration wants to do – which is to erode inequality in healthcare and so on – and how difficult it is to achieve that, to understand how important this is. There is a fundamentalist belief by capitalists that capital will save the world, and it just isn't so. Not because of what Marx said about the contradictions of capitalism, because, as I discovered, capital is an end in itself and no more.” That the wealthy get wealthier in capitalism may seem obvious to some; but capitalism is widely embraced by the poor as well as the rich because it increases productivity and supposedly makes everybody better off. Capitalism may make some filthy rich, so the story goes, but it also allows more mobility of status and income than pre-capitalist economies, thus opening possibilities to everyone. Piketty argues against these truisms. In the end, however, whether inequality is good or bad is not an empirical question, and no amount of empirical research can tell us whether capitalism is good or bad. What Piketty does show convincingly, is that capitalism will not lead to equality. For more on Piketty, see Roger Berkowitz’s essay at The American Interest.

Is Capitalist Inequality Really So Bad?

422Perhaps the best review of Piketty’s Capital in the Twenty-First Century is by Martin Wolf, the Financial Times columnist. Wolf gives an excellent summary of Piketty’s four “remarkable achievements” and then considers what they mean. He makes clear the importance of Piketty’s book. But he also raises the question Piketty leaves unasked: “Yet the book also has clear weaknesses. The most important is that it does not deal with why soaring inequality – while more than adequately demonstrated – matters. Essentially, Piketty simply assumes that it does. One argument for inequality is that it is a spur to (or product of) innovation. The contrary evidence is clear: contemporary inequality and, above all, inherited wealth are unnecessary for this purpose. Another argument is that the product of just processes must be just. Yet even if the processes driving inequality were themselves just (which is doubtful), this is not the only principle of distributive justice. Another – to me more plausible – argument against Piketty’s is that inequality is less important in an economy that is now 20 times as productive as those of two centuries ago: even the poor enjoy goods and services unavailable to the richest a few decades ago.” This does not mean that Wolf thinks increasing inequality is unimportant. Rightly, he turns to Aristotle to make this most-important point: “For me the most convincing argument against the ongoing rise in economic inequality is that it is incompatible with true equality as citizens. If, as the ancient Athenians believed, participation in public life is a fundamental aspect of human self-realization, huge inequalities cannot but destroy it.” You can read Eduardo Porter’s excellent review of the literature on the impact of wealth inequality on economic growth here. Of course, you should all read Piketty’s book for yourselves.

Fixed Records

423In an online interactive feature from The New York Times, an excellent example of what internet journalism can do well, John Jeremiah Sullivan recounts his recent search for 1930s blueswomen Elvie Thomas and Geeshie Wiley. Among his sources for the project was the blues scholar Mack McCormick, who has a mountain of blues material, photos and interviews as well as tracks, collected over several decades, and now organized into something called “The Monster.” McCormick has been largely unable to produce writing from his collection; as he's sitting on sources that no one else has, and that few have access to, this failure represents an extraordinary series of lacunas in blues history. Sullivan notes, however, that McCormick is still as significant a figure as the field has: “He is on record (in one of two or three notably good profiles done on him over the years) as saying that the subject of [blues guitarist Robert] Johnson has gone dead on him. And he has said since that part of him wishes he hadn’t let that one singer, that riddle of a man, consume him. Which is a human thing to feel . . . except for when you happen to know more than anyone on earth about a subject that loads of people in several countries want to know more about. Then your inability to produce becomes not just a personal problem but a cultural one. It’s plausible that the scope of research finally got too large for any one mind, even a uniquely brilliant one, to hold in orbit. The point here is not to accuse or defend him, but rather to point out that even his footnotes, even the fragments from his research that have landed in other scholars’ pages, have been enough to place him among the two or three most important figures in this field. He’s one of those people whose influence starts to show up everywhere, once you’re sensitized to it.” Sullivan’s essay is an excellent walk through the historian's craft, a peak into how the record is made, as it were. Although Arendt described the job of the historian as describing the world as it was, that task is more or less difficult depending on the preservation or availability of certain sources. Through a combination of resources and luck, Sullivan and his research assistant were able to piece together a little more than half the story he set out to tell; the rest is still absent, awaiting another curious investigator and another stroke of good fortune.

The Sacred and the Profane

Simonos Petra is a greek Orthodox monastery built on XIV century , in 1364 was enlarged by a serbian king ,, three times burned last time in 1891 with his library. Its located at the base of the Mount Athos with 2000 altitude . Agion Oros or Mount Athos iThere's a Greek mountain, Athos, home to a number of Orthodox monasteries, and no females; no women, no female animals. In a short profile of the space, Tom Whipple notes that it is both sacred and profane: “Athos is a place where a bearded octogenarian who has not seen a woman in 60 years can venerate the bones of a two-millennia-dead saint, then pull out a mobile phone to speak to his abbot. Where a pilgrim with a wooden staff in one hand can have a digital camera in the other. And where, in the dim light of dawn matins, I can look on a church interior that would be instantly recognizable to a pilgrim from five centuries ago. Maybe this is part of the reason I come: to play the time-traveler?” Elsewhere on the peninsula is a monastery under siege for having broken with the Orthodox Patriarch, and another that is believed to be in part responsible for Greece's financial crash more than half a decade ago. Even here, men who have repudiated the world find that they live within it.

Get To Work

425In an interview that covers his views on Ireland as a post-colonial site and the importance of gay themes in the Canon, Colm Toibin gives some advice to young writers: “I suppose the thing really is, you could suggest they might finish everything that they start. And the reason for that is, certainly with me, what happens is that something—an image, a memory, or something known, or something half thought of—stays in our mind, at some point or other it becomes a rhythm, and you write it down. Part of that is, you know it; you sort of know what you want to do. The chances are high of wanting to abandon it halfway through on the basis of, it really ceases to interest you because you know it already. And then you have to really push yourself to realize that other people don't know it. And that you're writing for communication, and that is not a private activity. Therefore you have to go on working—that's what the real work is maybe. But if you're young and starting off, it's so easy to abandon something at that point thinking, 'Oh yeah, I'm not sure there's any more I can gain from the writing of this.' And the answer is: You don't matter anymore. Get to work.”

Seeing The World Through God

426Rod Dreher, who picked up Dante during a midlife crisis, suggests that the Divine Comedy is about learning to see the world as it is through the mediation of the divine: “Beatrice, a Florentine woman young Dante had loved from afar, and who died early, serves as a representation of Divine Revelation. What the poet says here is that on Earth she represented to him a theophany, a disclosure of the divine. When she died, Dante forgot about the vision of divine reality she stood for. He allowed his eyes to be turned from faith—the hope in ‘the substance of things hoped for, the evidence of things not seen,’ as Scripture says—to a misdirected love for the transitory and worldly. This is how Dante ended up in the dark and savage wood. This is how I did, too. This is how many of us find ourselves there in the middle of the journey of our life. Dante’s pilgrimage, and the one we readers have taken with him, teaches us to see the world and ourselves as they really are and to cleanse through repentance and ascesis our own darkened vision through reordering the will. By learning to want for ourselves and for others what God wants, we become more like Him, and we come to see all things as He does."

Gabriel Garcia Marquez: A Second Opportunity on Earth

427Gabriel Garcia Marquez has died. It is worth revisiting “The Solitude of Latin America,” Marquez’s Nobel Prize acceptance speech. The speech ends with these words: “On a day like today, my master William Faulkner said, ‘I decline to accept the end of man.’ I would fall unworthy of standing in this place that was his, if I were not fully aware that the colossal tragedy he refused to recognize thirty-two years ago is now, for the first time since the beginning of humanity, nothing more than a simple scientific possibility. Faced with this awesome reality that must have seemed a mere utopia through all of human time, we, the inventors of tales, who will believe anything, feel entitled to believe that it is not yet too late to engage in the creation of the opposite utopia. A new and sweeping utopia of life, where no one will be able to decide for others how they die, where love will prove true and happiness be possible, and where the races condemned to one hundred years of solitude will have, at last and forever, a second opportunity on earth.”

Is it Possible to Be a Jewish Intellectual?

428In Haaretz (subscription required), sociologist Eva Illouz reprints her 2014 Andrea and Charles Bronfman Lecture in Israeli Studies, at the University of Toronto. Illouz considers Gershom Scholem’s accusation that Hannah Arendt had no lover for the Jewish people and her response, “How right you are that I have no such love, and for two reasons: First, I have never in my life ‘loved’ some nation or collective – not the German, French or American nation, or the working class, or whatever else might exist. The fact is that I love only my friends and am quite incapable of any other sort of love. Second, this kind of love for the Jews would seem suspect to me, since I am Jewish myself. I don’t love myself or anything I know that belongs to the substance of my being … [T]he magnificence of this people once lay in its belief in God – that is, in the way its trust and love of God far outweighed its fear of God. And now this people believes only in itself? In this sense I don’t love the Jews, nor do I ‘believe’ in them.” Illouz writes: “To better grasp what should strike us here, let me refer to another debate, one that had taken place just a few years earlier in France, where another intellectual’s position had also generated a storm. Upon receiving the Nobel Prize for Literature in Stockholm in 1957, Albert Camus was interviewed by an Arab student about his positions on the Algerian war. He famously answered, ‘People are now planting bombs in the tramways of Algiers. My mother might be on one of those tramways. If that is justice, then I prefer my mother.’ Camus’ statement provoked a ruckus in French intellectual circles. As Norman Podhoretz wrote, “When he declared that he chose his mother above justice, he was, as [Conor Cruise] O’Brien puts it, choosing ‘his own tribe’ against an abstract ideal of universal justice. A greater heresy against the dogmas of the left is hard to imagine.” Indeed, since the Dreyfus affair, at the end of the 19th century, intellectuals’ intervention in the public sphere had been defined by their claim to universality, a position that remained unchanged throughout the 20th century.… I evoke here Camus’ example only to better highlight how the position of the contemporary Jewish intellectual differs from what we may call the position of the intellectual in Europe. What was anathema to the European intellectual – to defend one’s group and family against competing universal claims – is, in fact, what is routinely expected from the Jewish intellectual – by which I mean not only the intellectual of Jewish origins, but the one who engages in a dialogue with his/her community…. Arendt’s refusal to respond to the needs of her group and the fury her positions generated is only one of the many occurrences in a long list of hostile reactions by the organized Jewish community to critique, defined here as a sustained questioning of a group’s beliefs and practices. (For a superb discussion of these issues, see Idith Zertal’s 2005 book Israel’s Holocaust and the Politics of Nationhood.) In fact, over the last 30 years, one of the favorite exercises of various representatives of Jewish and Israeli communities has been to unmask the hidden anti-Zionist or anti-Jewish tenets of critique. I am not saying some of the critiques of Israel may not be motivated by anti-Semitism. I simply note that the suspicion of critique has become an elaborate cultural and intellectual genre in the Jewish world.

From The Hannah Arendt Center Blog

This week on the blog, Lance Strate considers Arendt’s quotation, "The end of the old is not necessarily the beginning of the new." And in the Weekend Read, Roger Berkowitz looks at Timothy Shenk’s review of millennial Marxism and Thomas Piketty.

 

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
3Jan/130

Shadow Dance of the Fiscal Cliff

The Hannah Arendt Center has followed the shadow dance of the fiscal cliff less for its fiscal than for its political lessons. While a deal was struck, it is hard not to be impressed by the breakdown of our political class. Like the Europeans, we are now officially kicking the can down the road, refusing to address our meaningful problems. There is, in short, no political will and no political leadership with the courage and willingness to act in ways that might help us imagine a new way out of our predicament.

One could say it is the fault of voters. But there is a funny thing happening in politics. The House of Representatives, which is supposed to be the most populist of the major branches of government, is the one branch of government that is calling loudly for painful spending cuts and resisting the rise of our out-of-control debt. True the House is calling for tax cuts, but so too did the Senate and the President. What distinguishes the House now is its insistence on cutting spending. The Senate and President—imagined to be more protected from popular will—are instead combining now to cut taxes, increase spending, and keep the gravy train of government-subsidized stimulus flowing. In a strange way, it is the political body most responsive to voters that is at least calling for change—even if the House Republicans refuse to be honest about what those changes would be or what they would mean. Why or how has this political inversion happened?

One of the few Senators who voted against the compromise is Michael Bennett, the Democratic Senator from Colorado who was supposed to be cliff jumping in Vail (it’s nice here!) but stayed in Washington to vote “No.” Interviewed by Maureen Dowd in The New York Times, Bennett says: “Going over the cliff is a lousy choice and continuing to ignore the fiscal realities that we face is a lousy choice.” Bennett, a free thinking Democrat, knows that things have to change.

"The burden of proof has to shift from the people who want to change the system to the people who want to keep it the same,” he said. “I think if we can get people focused to do what we need to do to keep our kids from being stuck with this debt that they didn’t accrue, you might be surprised at how far we can move this conversation.

But what is it about the system that needs to change? Some see this as simply a matter of policy. Nouriel Roubini, writing today in the Financial Times, thinks taxes need to go up for all Americans to help support a welfare state that is drastically underfunded and yet ever-so necessary:

Neither Democrats nor Republicans recognise that maintaining a basic welfare state, which is right and necessary in our age of globalisation, rapid technological change and demographic pressure, implies higher taxes for the middle class as well as for the rich. A deal that extends unsustainable tax cuts for 98 per cent of Americans is therefore a pyrrhic victory for Mr. Obama.

Roubini may very well be right. But as he himself recognizes, the political will to exercise this transformation is simply not there. What that means policy wise, I do not know.

-RB

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
29Nov/120

The Bureaucracy of Sandy

The after effects of Super-storm Sandy are felt from the beaches to the statehouses. First of all, let’s realize it was not a hurricane, but a freakish combination of storm systems. Super-storm is more truthful than hurricane. Whatever it was, it has upended lives, and politics.

The Financial Times reports today that Governor Chris Christie of New Jersey has now joined NY Governor Andrew Cuomo in requesting not only emergency aid to repair the damage caused by the storm, but also preventative money to build dunes, use eminent domain to purchase property, and generally re-engineer the New Jersey coastline.

The political transformation here is lost on few. As the FT writes:

Mr. Christie, a Republican, has previously sounded more skeptical than Mr. Cuomo, a Democrat, about using state powers to dictate how the state was rebuilt. But he said on Wednesday he might take away local towns’ power to grant “easements” to homeowners objecting to new dunes blocking their sea views and would not rule out using government powers to purchase properties it believed were in the wrong place.

“I have to protect the Jersey shore, both as an economic engine and as a cultural engine,” Mr. Christie said.

The desire to take away local powers and give them to states and to take away state powers and give them to the federal government is neither a democratic nor a republican idea anymore. While the party of the elephant may give lip service to local governance, it has rarely, if ever, backed that up with action. As is now well known, the federal government has grown as fast if not faster under Republican Presidents than it has under democratic.

Hannah Arendt argued that the greatest danger to freedom in the United States was the rise of a large and bureaucratic government. She worried, as she once wrote, that the true threat to freedom was the sheer size of America alongside the rise of a technocracy. The sheer size of the country combined with the rising bureaucracy threatened to swallow the love for freedom she saw as the potent core of American civic life.

Chris Christie and Andrew Cuomo may well be their respective parties’ nominees for President in 2016. They are both deeply popular and have taken a pragmatic and largely centrist approach to governing at a time of financial crisis and natural disaster. And yet, from an Arendtian angle, it is striking that both governors have so internalized the view that problems are to be solved by bureaucrats and technocrats rather than on a local level.

That the bureaucratic approach is so entrenched should not be a surprise. It is both a consequence of a further spur to the retreat from politics that Hannah Arendt describes. Even Christie’s insistence that he must save the Jersey shore as an economic engine shows the near complete victory of economic thinking over politics.

-RB

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
19Jul/121

Does the President Matter?

Does the President Matter? Consider this quotation from Jurek Martin in today's Financial times:

Barack Obama and Mitt Romney may speak, sometimes even to real audiences but more often to fat cat fundraisers, but their words fall on deaf ears if not empty wallets. Lots of people speak for them, in the strange languages known to advertising and political consultants, but what they say is ephemeral and leaves, beyond the daily news fix, “not a wrack behind”, as Shakespeare put it. Yet they are fueled by piles of money, which means they speak more and more – to lesser and lesser effect.

Lawrence Lessig is of course right to worry about the corrupting influence of money on our elections. But the greatest effect of all this money is the drowning out of meaningful speech in a throbbing sea of money-driven sound bites, consultant-approved platitudes, and poll-tested attacks. Everyone must stay on message, which means that no one says or does anything. In such a system, how can the President matter or make a difference in the world?

If you have an answer, enter our 2012 Thinking Challenge by answering the question: "How might the President Matter in the 21st Century?"

Learn more here.

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
19Jun/121

The Crisis of European Politics

Greece voted on Sunday and the headline account shows that the right of center moderates won. This was presented as good news, for it means a continued embrace of the Euro and years more of austerity. But there are other lessons to glean from the Greek election.

1.  Extremism is rising quickly in Greece. As the Financial Times reports,

The parliament, for the first time in Greek history, will be full of extremists. Besides the neo-nazis and a Stalinist communist party there is Syriza, whose leader is a fan of Mao Zedong, Fidel Castro and Hugo Chávez. How did Greece, the birthplace of democracy, come to have a parliament full of hammers, sickles and swastikas?

2. The Greeks are being asked to suffer for years more, but with little or no hope in sight. Here is what the NY Times reports today, an opinion from one of the most knowledgeable commentators on the Greek crisis:

“Greece will be forced to return to the drachma and devalue, and the default will cause bank runs and money flowing into Germany and the United States as the only viable safe haven bets,” he declared the day before Sunday’s Greek elections, irrespective of which party would win. “Greece will default because there is no other choice regardless of anyone’s politics.”

Almost all of the loans that Greece receives from Europe go directly to pay off the interest on loans to banks in Germany and elsewhere. Greece is neither paying down its debt nor investing in its future. The result is that the Greeks will suffer through years more of austerity and will likely be in no better position in a few years than they are now.

3. The combination of 1 and 2 above do not bode well for European politics in the coming years.

When Hannah Arendt looked to the Origins of Totalitarianism in the 20th century, she began her analysis with the financial speculation and subsequent crash of 1870. The ensuing crisis led to a weakening of nation-states and the rise of imperialism, all of which dissolved the traditional political and moral limits that had for centuries formed the structural foundation of European civilization.

As Europe struggles now to overcome national political limits as a response to the financial and banking crisis, it faces once again a political crisis mixed with an economic crisis. Europe is in trouble and they are not alone. But in Europe, unlike in the U.S. or in Japan, the financial crisis is inextricable from a crisis of nationalism and sovereignty. The potential for nationalist extremism on the one hand is real. On the other hand, there is also the potential for a weakening of national political traditions and the rise of technocratic and bureaucratic rule that, for all its rationalism, weakens moral and ethical restraints.

-RB

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
24May/121

The Technocrats to the Rescue, Part 4

How many times can we watch the latest European movie? Once again Europe is buckling under the weight of debt and austerity. And once again, Greece, the birthplace of democracy, has led the democratic leaders of Europe to shun their responsibilities and beg for technocratic saviors.

As the Financial Times reports, European leaders are as bankrupt as their economies and they are seeking to be bailed out politically and economically by Mario Draghi, the unelected President of the European Central Bank.

To the frustration of Mario Draghi, its president, the European Central Bank is once again being eyed as a possible saviour of Europe’s monetary union.  Since he became president last November, Mr Draghi has urged bolder action by politicians to strengthen public finances and build effective “firewalls” against spreading crises. Earlier this month he scolded governments for creating a European Financial Stability Facility that “could hardly be made to work”. He saw the unelected ECB’s role as strictly limited.  Instead, eurozone politicians, led by François Hollande, France’s new president, have sought to turn the tables, demanding action from Frankfurt.

As one person the FT quotes says, “There is a constant frustration at the ECB with politicians.” Sounds familiar. It is not only in Europe that politicians have refused to lead and take responsibility for solving our growing and increasingly insoluble problems.

It is easy to blame politicians. But keep in mind, they are elected. And that may be the problem. For it is we, those self-interested and apparently spoiled folks who elect them, who refuse to consider tax raises or austerity, or both, which would actually be necessary to bring our financial houses into order. This is especially true in Greece where voters have repeatedly refused to honestly and pragmatically accept the reforms needed to right the ship of the Greek state.

Which is why Amartya Sen's Op-Ed in the NY Times Tuesday sounds so shrill. Sen rightly sees that democracy in Europe is being replaced by technocratic fiat, and this understandably bothers him. He writes:

Perhaps the most troubling aspect of Europe’s current malaise is the replacement of democratic commitments by financial dictates — from leaders of the European Union and the European Central Bank, and indirectly from credit-rating agencies, whose judgments have been notoriously unsound.

But Sen's response is out of touch. If the Greeks would just be given an opportunity to publicly discuss the matter and engage in a rational public discourse, they would be able to take appropriate steps. In his own words:

Participatory public discussion — the “government by discussion” expounded by democratic theorists like John Stuart Mill and Walter Bagehot — could have identified appropriate reforms over a reasonable span of time, without threatening the foundations of Europe’s system of social justice. In contrast, drastic cuts in public services with very little general discussion of their necessity, efficacy or balance have been revolting to a large section of the European population and have played into the hands of extremists on both ends of the political spectrum.

This is of course a good point. It would be best if the Greeks were to engage in. It would be best if the Greeks were to engage in participatory public discussion leading toward appropriate reforms. But this doesn't seem to be happening, resulting in the draconian cuts, which, yes, are revolting to a large section of the European population. Unmentioned is the fact that other Europeans are revolted by the fact that Greeks for years have worked pitifully few hours in comparison to other Europeans, have paid significantly lower taxes, and supported a political patronage system that creates an untouchable class of political bureaucrats who live well for doing very little. The New York Times reports, today, on the class of Greek plutocrats who for years have avoided taxes and now, when times are tough, are abandoning philanthropies in Greece and secreting their money to tax havens. If the Greeks won't help Greece, why should the Germans?

The point is not simply to punish the Greeks for their past transgressions (although that too is not out of place), but that Germans also no longer trust the Greeks and refuse to go on paying for their profligate ways. And since the Greeks have not and seemingly will not democratically make the changes to their lifestyles that are required by their economic position, they are putting their hopes in undemocratically elected technocrats at the European Central Bank to save them.

The Greeks are not alone in seeking to trade democracy for technocracy. As I have written here and here and here over the past months, the trend toward technocratic governance is growing as people around the world lose faith not simply in democratic leaders, but in democracy itself. Around the world, democracies are electing politicians who are handing off power to non-democratically elected technocrats. This is happening in Europe and also here in the U.S.  I am sure some of "the people" disagree with this. But more and more seem fine with it.

It is easy to blame the politicians, just as it has been easy for years to blame the press. But as Edward Luce writes in his recent book Time to Start Thinking, the real problem with democracy is us. He focuses on America:

Americans reflexively single out Washington, D.C., as the cause of their ills. As this book will explore, however, Washington's habits are rooted in American society. Blaming politicians has turned into a lazy perennial of modern American life.

The problem as Luce sees it is that left and right are caught in a thoughtless nostalgia for a golden age that no longer exists. The left, he writes,

yearns for the golden age of the 1950s and '60s when the middle class was swelling and the federal government sent people to the moon. Breadwinners worked eight hours a day in the factory and could bank on "Cadillac" health care coverage, a solid urban or suburban lifestyle, and five weeks' vacation a year.

On the other side, the right is nostalgic for

the godly virtues of the Founding Fathers from whom their country has gravely strayed. People stood on their own two feet and upheld core American values. It was a mostly small town place of strong families, where people respected the military and were involved in their community churches.

Luce understands not only that both these visions are nostalgic, but that they are preventing us from thinking honestly and seriously about our present. The problem is that thinking honestly today requires accepting sacrifice.

The wealthy and the upper middle classes (not just the 1% but the top 20%) will have to pay more in taxes. The poor and the middle classes will have to receive smaller pensions, work longer, and get fewer governmental services in return. Maybe citizens will have to do public service. Standards of living across the board will be hit. This is the payback for decades of debt-infused living that we all need to confront. Luce is right, it is time to start thinking.

-RB

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
5Apr/121

Saving Pensions: “Technocrats, Not Grandstanding Idealists”

Public pensions are a mess. Ok, where is the hope? Yesterday Gillian Tett offered a rare glimmer of good news in a story about Rhode Island treasurer Gina Raimondo. But the good news comes with a bitter aftertaste.

Rhode Island is a small state, but it had one of the worst public pension deficits in the country. Forced to act, it has cut pensions for its workers, raised the retirement age from 62 to 67, and replaced the defined benefits pension (which guarantees a certain amount every year) with a partial defined contribution scheme (which pays out a pension based on how much the retiree has saved). These actions have angered many workers and unions, who are suing the state, but they have also saved the state pension system; one result is that the workers will be receiving some pension, even if it is less than they were promised.

The solution, as Raimondo articulates it, is above all to focus ruthlessly “on the math and facts, to come up with a solution.” Technocrats, not grandstanding idealists, are required.

The preference for technocrats over idealists illustrates a common approach to our extraordinary economic problems around the country: to hand over difficult political judgments to technicians. The same approach is leading the people to hand over the levels of government to technocrats in Greece, Italy, Suffolk County, and now Detroit. Dissatisfied with democratically elected leaders, the people are increasingly craving a government run by businessmen and accountants. It seems that the ruthless calculation of profit and loss is the last refuge of truth in our age.

Read more about what is going on in Detroit here. Read more about the pension crisis here and here.

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
4Apr/122

The End of Democracy in Detroit?

It was Winston Churchill who said that democracy was the worst form of government, except for all the others. We have been living in passive agreement with Churchill's witticism for half a century. But slowly, harrowingly, fatalistically, people around the world are giving up on democracy.  

Greece, the birthplace of democracy, and Italy (well, it's Italy) are now both governed by unelected technocratic governments charged with carrying out austerity programs that democratically elected leaders would not or could not bring about.

According to Gillian Tett, the Financial Times columnist, "the situation calls for very firm, forward-looking action that is almost impossible in a rowdy democratic political system at the moment." Tett is not alone in seeing the failure of democratic leadership in crises and the inability of democratic politicians to allocate pain and sacrifice amongst their constituents.

We in the United States are showing a similar predilection to trade democracy for technocratic management. Michigan is at the forefront of this trend. Governor Rick Snyder has been aggressive in appointing emergency managers to take control of city finances. In Pontiac, Flint, Benton Harbor and other Michigan cities, the mayors and town councils have been fired and rendered obsolete, replaced by a manager appointed by the governor.

In New York, Nassau County is now under the rule of an "oversight board" that controls its budget and finances. In Michigan, financial managers have the power to void labor contracts, privatize public services, and dismiss elected officials. These managers serve at the will of the governor, but they have no set term.

Tomorrow we may learn whether Detroit, Michigan's biggest and once proudest city, will also succumb to an emergency manager. The only alternative, it seems, is a consent decree with the State that will turn the city over to a manager jointly selected by the city and the state from a slate of candidates approved by the governor. The problem, once again, is that democratic governments have simply been unable to make the hard decisions needed. The result is that Detroit is bankrupt and in need of a state bailout and the state is treating Detroit like the spoiled child it is, just as the European Union treats Greece and Italy. Money will come, but only if the children agree to be treated like children.

I can only point out so many times that Wall Street bankers also acted like spoiled children, but they received their bailouts and undeserved bonuses without the demeaning financial oversight. Hypocrisy, however, is not an argument for or against such oversight, even if it does reveal that there are issues beyond simple economic calculation at play. In Europe, there are prejudices against the laziness of southern peoples, and here in the U.S. racial prejudices are no doubt active, as can be seen by one commentator's likening Detroit's citizens to addicts:

As those of us in surrounding communities watch the ongoing tragedy unfolding in Detroit, we really need to hope that this once great city can stop its decline, and begin to recover. But just like with an alcoholic, the city's so-called leaders must first admit they have a problem, and that they are unable to fix it on their own. Unfortunately, they do not appear to have reached that point yet. I guess a nice way of putting it would be to say that they are in denial.

Patronizing rhetoric aside, the basic problem is that the people of Detroit—like the people of Greece and Italy—are unwilling to govern themselves and are welcoming technocrats to take over that task.   We witness once again how easily people will abandon democratic freedoms for the promise of a bailout. The current argument in Detroit is less about whether to give up self-government—a foregone conclusion—but how much money Detroit can extract in the deal for doing so.

The Romans had a provision in their law for the appointment of a dictator during emergencies, especially at war. A dictator, as Andreas Kalyvas reminds us, was not a tyrant. A dictator in Roman law was a  'temporary tyranny by consent' while a tyrant was a 'permanent dictator.' The Roman Republic recognized that crises required decisive action that a sprawling democracy was frequently unable to muster. The dictator was not illegal, but was a constitutionally approved office that was appointed for a set term, after which time power would revert back to the people. In other words, a dictator was a constitutionally regulated and democratically agreed upon safety valve for the failures of democracy.

Modern democracies have largely avoided such emergency powers, and for good reasons. It seems, however, that such resistance is fading. Will it be until we have no choice but to appoint an emergency financial manager to do the job we won't do for ourselves? But then again, who would appoint such a person?

For Hannah Arendt, this was and remains a crucial question. For human beings are political beings who actualize their freedom in public action with others. The entire premise of what Arendt once called the "dictatorial intervention" is to replace politics with the temporary tyranny of the educator. It is to admit our immaturity and call for a tyrant who will treat us as children. And yet that is, precisely, what it seems we want.

-RB

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
28Mar/121

Pensions: The Unraveling Fiction

How big is the pension crisis in the United States? As I wrote last week, The Pew Charitable Trust has issued a report that there is a whopping $1 trillion dollar gap between the pensions promised to state public employees and the money that has been set aside to pay those pensions. But I also said that many people think that gap is actually much bigger.

The states' calculations assume a rosy 8% or even 10% return on their investments. The Pew report shows that even with those unrealistic assumptions, there will be a $1 trillion gap, since the states are underfunding their pension funds even based on optimistic returns.

Recently, Gillian Tett of the Financial Times talked to a few academics about the question and learned why the gap is actually $3-5 trillion dollars, and not simply $1 trillion. The basic problem is that low interest rates (now around 2%) mean that the investment on pension funds is not returning close to the hoped for amount. As Tett reports:

Thus academics, such as Joshua Rauh of Northwestern University, think that if a more realistic rate of return were used, this would reveal that state pension funds are now underfunded to the tune of $3tn-$4tn. Other observers are even gloomier. “This $4tn figure is a lower bound,” argues Robert Merton, economics professor at MIT. “Liabilities as reported by state and local governments seem to creep steadily up with each report due to ‘actuarial losses’ or overly generous assumptions about mortality and worker behaviour. In recent years, these have added growth of about 4-5 per cent per year to total liabilities.” And, of course, the longer that US interest rates – and bond yields – remain ultra low, the worse this underfunding gap becomes.

Tett's essay makes for a sobering read. As she rightly points out, this problem cannot be ducked forever. Remember, the 2009 bailout that President Obama pushed through was $900 billion, slightly under $1 trillion. We are talking about a shortfall in state budgets of $3-5 trillion in coming years. This is enormous and the effect on state governments and public services will be disastrous. But the very worst effect will be on all of those public employees who have been counting on contractually guaranteed pensions who will, I fear, learn what workers in Rhode Island and Alabama recently learned: such contractual guarantees don't mean much.

What does it mean to have a fact-based politics? This is a question that Hannah Arendt struggled with. First in her writings on totalitarianism, she saw that at the core of totalitarian regimes was the need to keep alive a coherent fantasy that motivated the mass movements supporting the regimes. When inconvenient facts appeared, they simply had to be eradicated.

Later, writing during the Vietnam war and in response to her book Eichmann in Jerusalem, Arendt argued that lies came to serve not totalitarian movements, but well-meaning idealists and technocrats who convinced not only others but even themselves that their lies were in the service of a winnable and noble cause.

Today we face the unraveling of a huge fiction. While the United States is still a wealthy country, we are not as wealthy as we have pretended to be over the last 15 years. But instead of addressing this self-deception, we are continuing to demand higher pensions and better medical care without actually asking who is going to pay for such services. It is a nice slogan to say that pensions and healthcare are human rights. But the current way we are achieving such human rights is by lying to ourselves, and, most pointedly, to the public employees who will see their promised pensions and healthcare evaporate during their retirement.

It would be nice if one of the Presidential candidates in either party would actually discuss the crisis in state pensions. But that would require courage and leadership, not to mention a willingness to have an honest conversation about the fact that this country continues to live beyond its means and promise benefits it cannot afford.

-RB

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
16Mar/120

Confronting Reality on Wall Street

This week, Greg Smith announced his resignation as an executive from Goldman Sachs in a highly publicized Op-Ed piece for the New York Times, aptly titled “Why I am Leaving Goldman Sachs.”  The letter describes a transformation in the “culture” of the giant investment firm that has gone from a business with integrity to one which is now “as toxic and destructive” as Smith has ever seen it during his twelve year tenure. “To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.”

Such behavior being tied to a Wall Street firm is not exactly surprising. And in Goldman's case, one wonders where Mr. Smith has been. In the last few years, a number of Goldman's clients have sued the bank, including ACA Financial Guaranty, Basis Capital, an Australian hedge fund, and ABP, a Dutch pension fund. Each argues that Goldman materially harmed them by selling them bad products. And Goldman already paid out $500 Million dollars to settle the Abacus case, in which Goldman was accused of illegally profiting by deceptively selling worthless paper to its customers.

There is a sense in which one looks at Mr. Smith's holier than thou revelation that Goldman was not the noble corporation he once thought it was and asks: really? Haven't you read anything Michael Lewis has written over the last 10 years? Not to mention Matt Taibi—the author of a take down of the mythic Goldman Sachs culture that was published two years ago.

Smith derides his former employer for focusing on profit above the well-being of the client. He puts this is stark business terms. He writes:

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

What Smith takes as a simple truth, is anything but. Trust is in short supply, and yet people work with Goldman and others because they believe that Goldman will make them money. As long as they think that Goldman will make them money, they don't really care that Goldman will make more money or that Goldman is looking out for itself. Clients continue to flock to Goldman because making money is what everyone cares about, not trust. One client of Goldman Sachs was even quoted as calling Smith “naïve” for believing that the business he is in was ever about anything but profit.

Frank Portnoy, writing in the Financial Times, argues that what is really at stake here is the definition of a client. Goldman is now a huge public firm with a few big clients it serves as advisors, and then thousands if not millions of smaller clients who simply buy its products. Goldman needs to have the trust of its major clients, but not is smaller ones.  Just as Coca-Cola has an obligation to make sure that what it is selling is actually Coca-Cola, Goldman has a responsibility to sell you what it tells you it is selling you. But neither Coca-Cola nor Goldman are obligated to tell you that their products aren't healthy for your body or your wallet.

The Goldman myth is just that, at least today. After Goldman went public it transformed from a small investment bank with $1.4 billion in investments in 1998 to a huge corporation with investments of $13.96 billion in 2008, using a leverage ration of 26 percent. Does anyone really think that such a company is not driven by the bottom line?

Reconciling ourselves to reality—telling ourselves the truth—is one of the first demands of ethical life.

One such truth is that business today is very different than it used to be. One needs to confront and comprehend such a truth, especially if you want to resist it. And that is the problem with too many of the responses to Greg Smith's letter.

Yes, Smith seems naive and snarky. And why did he give us his resume at the end of his letter? He clearly has some issues. But the basic point he raises—that business should be conducted with some basic ethical standards beyond that of minimally following the letter of the law—is one worth discussing. There are some clients who want to work with bankers that treat them both kindly and respectfully, and they should know to avoid swimming with the sharks. And there is a real question whether pension funds and other institutions are sophisticated enough to swim in the waters with the likes of Goldman. And finally there is the worry that so many of our brightest young people want to work for firms at which the unmitigated search for profit—restrained only by the letter of the law—is the cultural demand. We need more discussions of such questions. So, as distasteful as I found Smith's letter, I must admit I am happy he published it.

A better airing of many of these same issues happened at the Hannah Arendt Center's 2009 Conference, The Intellectual Origins of the Financial Crisis. A number of our panelists touched precisely on this question of the cultural change in business and Wall Street in particular. The book of essays based on that conference will be published this year.

In the book is included an interview with Vincent Mai, at the time the Chairman and Partner of AEA Investors. In this interview, Mai offers an insiders' perspective on the cultural changes that the financial world has undergone. With more eloquence and also more awareness than Greg Smith, Mai offers an account of an inverted world, one in which trust, reputation, and respect have been replaced by a whole new set of values.

I don’t mean that everybody was a saint and today they’re all sinners. Far from it. But there was a set of ground rules that governed the way you did business which imposed a discipline which was central to the way Wall Street worked. It was the same in all the firms. And I’ve watched with a combination of fascination and horror at the way the world has changed, turned upside down.

Mai's story of the way the world of Wall St. has been turned upside down is fascinating reading, and worth more of your time than another 10 commentaries on Greg Smith. The book with Mai's interview won't be out for a few months still, but for now you can read it here. I recommend you do so for your weekend read.

RB

 

Roger Berkowitz
Roger Berkowitz is Associate Professor of Political Studies and Human Rights at Bard College, and Academic Director of the Hannah Arendt Center for Politics and the Humanities. He is also the author of "Gift of Science: Leibiniz and the Modern Legal Tradition", as well as co-editor of "Thinking in Dark Times: Hannah Arendt on Ethics and Politics".